Sanson v Energy Products Ltd HC Auckland CIV 2009-404-5464

[2010] NZHC 1024

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-005464

BETWEEN  CHRIS ALEXANDERSON SANSON Plaintiff

ANDENERGY PRODUCTS LIMITED AND DEMON DRINKS LIMITED

Defendant

Hearing:         (On the papers)

Counsel:         M Colthart for the Plaintiff

W Akel for the Defendants

Judgment:      11 May 2010 at 12:00 pm

[DISBURSEMENTS] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 11 May 2010 at 12:00pm

pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors/Counsel:

Thomas Dewar Sziranyi Letts, P O Box 31 240, Lower Hutt

Simpson Grierson, Private Bag 92 518, Auckland

M Colthart, P O Box 535, Shortland Street, Auckland 1140

C A SANSON V ENERGY PRODUCTS LIMITED AND DEMON DRINKS LIMITED HC AK CIV 2009-404-

005464  11 May 2010

[1]      In  a  judgment  delivered  on  11  February  2010,  I  awarded  costs  to  the defendants in the sum of $5,000 together with reasonable disbursements.  I directed that the disbursements were to be fixed by the Registrar, and that in the event of a dispute, the same was to be referred to me.

[2]      The  plaintiff  and  defendants  have  since  been  unable  to  agree  on  the calculation of reasonable disbursements.

[3]      On  13  April  2010,  the  defendants  filed  a  memorandum,  seeking  that reasonable disbursements be fixed at $794.89 (GST inclusive).  This amount consists of:

a)        Courier fee of $13.71 for the service of documents relating to the second injunction application; and

b)        “Document production costs” of $781.18.

The affidavit filed in support sets out how the “document production costs” were calculated.   The defendants’ solicitors charge a percentage of their overall fee as disbursements.   This is stated in the relevant invoices to consist of “document production, delivery and telephone calls”.

[4]      On 14 April 2010, the plaintiff filed a memorandum disputing the document production costs of $781.18.  The courier fee of $13.71 is not disputed.  The plaintiff submits that a percentage-based approach to calculating disbursements is erroneous. He estimates that the actual costs of photocopying, faxing, binding, and copies of additional case law should be $72.00 (GST inclusive), at 20 cents per page for 220 pages, and with $20 for binding.

[5]      I turn now to consider how reasonable disbursements should be calculated.

[6]      The starting point is r 14.12 of the High Court Rules.  This reads:

14.12   Disbursements

(1)      In this rule,—

disbursement, in relation to a proceeding,—

(a)means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and

(b)      includes—

(i)       fees of court for the proceeding:

(ii)      expenses of serving documents for the purposes of the proceeding:

(iii)     expenses  of  photocopying  documents  required  by these rules or by a direction of the court:

(iv)     expenses of conducting a conference by telephone or video link; but

(c)      does not include counsel’s fee.

relevant issue, in relation to a disbursement, means the issue in respect of which the disbursement was paid or incurred.

(2)A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—

(a)      of a class that is either—

(i)approved  by  the  court  for  the  purposes  of  the proceeding; or

(ii)      specified in paragraph (b) of subclause (1); and

(b)      specific to the conduct of the proceeding; and

(c)      reasonably necessary for the conduct of the proceeding; and

(d)      reasonable in amount.

(3)Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.

(4)A Judge or an Associate Judge may direct a Registrar to exercise the powers of the court under subclause (2) or (3).

…

[7]      To be recoverable as a disbursement, an item must first come within the definition in r 14.12(1).  It is then only recoverable to the extent that an item claimed as a disbursement is either approved by the Court or specified in para (b) of sub (1). Further,  it  must  be  “specific  to  the  conduct  of  the  proceeding”,  “reasonably

necessary”, and “reasonable in amount”.  Any disbursement claimed may be held by the Court to be “disproportionate in the circumstances of the proceeding”.

[8]      In Mawhinney v Waitakere City Council,[1] Fogarty J allowed the recovery of photocopying and binding charges as disbursements.  He also considered that toll, fax, and courier charges were “necessary and specific to the litigation” and were recoverable.    Travel  expenses  were  not  allowed,  as  they  were  not  considered expenses ordinarily charged for separately from professional services.

[1] HC Auckland CIV-1999-404-1850, 26 September 2007 at [12]–[13].

[9]      In my view the wording of r 14.12 makes it clear that it is not appropriate to calculate disbursements by taking a percentage of counsel’s overall fee.   A disbursement  is  some  amount  actually  paid  or  incurred  as  an  “out  of  pocket” expense.     It  is  not  a  percentage  of  some  other  figure.     Moreover,  fixing disbursements as a percentage of counsel’s fee does not allow the Court to determine whether the expenses claimed as a disbursement are those that would “ordinarily be charged for separately from legal professional services”; in my view, a percentage fee for disbursements is not sufficiently distinguishable from “counsel’s fee”.   In such circumstances, the Court cannot ascertain whether an amount claimed as a disbursement is an item specified in r 14.12(1)(b).  In my view, each disbursement claimed should be itemised so that the Court can, if necessary, ascertain whether it comes  within  the  definitions  in  r  14.12(1)  and  satisfies  the  requirements  in r 14.12(2).

[10]     It should now be sufficiently clear to the parties how they should calculate the sum payable to the defendants by way of reasonable disbursements.  In the event that there is further dispute as to the precise calculations, I direct the Registrar to resolve it.

Wylie J